CSO Insights 2016 Channel Sales Optimization Study · CSO Insights 2016 Channel Sales Optimization Study ... CSO Insights 2016 Channel Sales Optimization Study ... After all, if you’re

CSO Insights 2016 Channel Sales Optimization Study

© 2016 Miller Heiman Group All Rights Reserved.



Terms and Conditions

Printed in the United States of America. Except as permitted under the United States Copyright

Act of 1976, no part of this publication may be produced or distributed in any form or by any

means, or stored in a database or retrieval systems, without the prior written permission of the

publisher. For additional information, contact Miller Heiman Group, Inc. 10901 W. Toller Drive,

Suite 202, Littleton, CO 80127, email: [email protected].

The reader understands that the information and data used in preparation of this report were as

accurate as reasonably possible at the time of preparation by the publisher. The publisher

assumes no responsibility to update the information or publication. The publisher assumes that

the readers will use the information contained in this publication for the purpose of informing

themselves on the matters which form the subject of this publication. This publication is licensed

with the understanding that neither the authors nor those individuals interviewed are engaged in

rendering legal, accounting, or other professional advice or services. If legal or other expert advice

is required, the services of a competent professional person should be sought. The publisher

assumes no responsibility for any use to which the purchaser puts this information.

All views expressed in this report are those of the individuals interviewed and do not necessarily

reflect those of the companies or organizations that may be affiliated with Miller Heiman Group.

All trademarks are trademarks of their respective companies.

mailto:[email protected]



Acknowledgments

I would like to thank all the sales leaders and channel sales professionals who took time out of

their busy schedules to share the data, insights, and best practices they use to optimize selling

through a channel. Without their support, the development of the research knowledge base used

to create the 2016 Channel Sales Optimization study would not be possible.

Next, I would like to thank Accenture for their partnership and thought leadership support for

this project. Accenture has been a trusted advisor and client of CSO Insights for over 15 years.

Lastly, I would like to thank our editing team whose hard work and diligence made this project

possible. Thanks to Paul Maxwell, Diane Hodges, Melissa Paulik, and Andy Jesmok.

Sincerely,

Kim Cameron Director, Studies and Services CSO Insights +1 (775) 831-9013 [email protected]

http://www.accenture.com/us-en/pages/index.aspx

http://www.csoinsights.com/




Table of Contents

2016 CHANNEL SALES OPTIMIZATION STUDY INTRODUCTION .................................. 1

PROCESS FOR SUPPORTING AND ENGAGING CHANNEL PARTNERS........................... 5

LEVELS OF RELATIONSHIPS WITH CHANNEL PARTNERS – HOW PARTNERS VIEW

YOUR COMPANY ..................................................................................................... 7

SALES ENABLEMENT SERVICES OFFERED TO CHANNEL PARTNERS ............................ 9

CHANNEL PARTNERS’ RATING OF YOUR COMPANY’S PRODUCT TRAINING ............. 11

YOUR COMPANY’S VISIBILITY INTO YOUR CHANNEL PARTNERS’ PIPELINES ............ 13

CHANNEL SALES’ CORE FUNDAMENTALS ............................................................... 16

ABILITY TO ARTICULATE BUSINESS DRIVERS TO AFFECT CHANNEL’S MINDSHARE ... 19

CHANNELS’ INFLUENCING SKILLS ........................................................................... 22

CHANNEL CAN CREATE AN OVERALL STRATEGY FOR DEVELOPMENT OF A

PARTNERSHIP........................................................................................................ 24

LEADING AND MANAGING PARTNERSHIPS ............................................................ 26

ABOUT CSO INSIGHTS ............................................................................................ 28


1 © 2016 Miller Heiman Group, Inc. All Rights Reserved.

2016 CHANNEL SALES OPTIMIZATION STUDY INTRODUCTION

The data used for this analysis was gathered as part of CSO Insights’ biannual Channel Sales

Optimization study. As part of this research effort, we used the first 110 respondents surveyed

from companies worldwide, collecting information on 58 channel management effectiveness-

related metrics. We continue to leave the survey open to collect additional data for benchmarks

based on geography, vertical industry, company size, etc. Contact Kim Cameron if you would like

to take this survey.

By way of an overview of the study demographics, 39% of the study participants worked with

United States-based companies and 61% were with international firms. Nearly all the study

participants worked for companies that focus on B2B sales. Regarding company size, 35% of the

respondents work for firms with revenues greater than $1B, 24% for companies with $50M - $1B

in revenues, and 41% for firms with less than $50M in revenues.

Next, we’d like to share an overview of key metrics. The following pie chart shows a breakdown

of the percentage of a company’s total revenues generated by channel partners. We see a mix of

firms heavily dependent on channel partners for their overall success compared to firms that have

a minor channel presence.

One of the first areas we wanted to explore was how revenue generation is spread across the population of channel partners. The following chart shows a breakdown of the answers we received when we asked, “How much of channel revenues are generated by the top 20% of all partner firms?” 36% of the respondents reported their top-tier partners are generating greater than 70% of all channel revenues.

mailto:[email protected]?subject=Take%20Channel%20Survey



We also wanted to gauge the success of channel partners in terms of meeting their revenue

objectives. A breakdown of the response is shown the following chart, where results vary widely.

Next, in terms of the importance and growth of a channel in the overall sales mix, we asked study

participants to tell us what changes they anticipated in the size of their channel network over the

next twelve months. The chart below shows that the vast majority of professionals surveyed view

the channel as important and will continue to grow their channel network.



The big question is, what needs to be done to maximize the performance of the channel? In the

following 2016 Channel Sales Optimization Key Trends Analysis, we will focus on the current state

of channel management performance. We will highlight the challenges facing channel sales

professionals, drill into why those problems exist, and then provide insights into how to keep

moving the performance bar even higher for this year and beyond. We have also produced a

PowerPoint presentation with a summary of charts that show the responses to questions asked

in the 2016 Channel Sales Optimization study.

As always, we hope the information presented in this analysis will help you effectively optimize

your organization’s channel management efforts. While we believe the issues raised have broad

applicability, we encourage you to use this information only as the basis for brainstorming and

goal-planning sessions for identifying and prioritizing your channel management objectives.

Everyone can benefit from understanding the strategies and tactics other companies are using,

but in the end, you must implement solutions that fit your specific business needs and not those

of other firms.



To discuss this report in detail, or if you have any questions or comments on the information

presented in this report, feel free to contact either of us.

Sell well,

Barry Trailer Jim Dickie Chief Research Officer Strategic Advisor CSO Insights CSO Insights +1 (916) 712-9621 +1 (303) 521-4410 [email protected] [email protected]







PROCESS FOR SUPPORTING AND ENGAGING CHANNEL PARTNERS

Observations and Insights

Levels of process implementation is a concept we borrowed from our other studies because it has withstood the test of time. Over the past decade, higher levels of sales process implementation corresponded with higher levels of sales achievement. This was mostly true when applied to levels of process support, although Ad Hoc (level 1) had a higher percentage of sales representatives achieving their revenue target at 35.3% than Informal (level 2) at 30.1%. It was all uphill from there, however, with 38.8% of sales representatives with Formal (level 3) process support reaching their targets, followed by a big jump to 47.9% for Dynamic (level 4). So the pattern is heading in the right direction, but the levels are not impressive. In this year’s Sales Performance Optimization study, 53% of sales representatives made their number, and Dynamic process level firms recorded 62.3% of their sales representatives doing so. What would explain this dramatically lower achievement? For openers, it would appear there is not a direct translation from sales process implementation to sales process support. The arm’s length between directly implementing versus formally supporting is likely key. Characteristics of companies moving from Ad Hoc to Dynamic in process implementation are increased process

Key Findings

Levels of formal/informal process support are identical.

Performance heavily favors more formal process approach.

Lead generation is good; coaching is better.



orientation, coaching, leveraging technology, collaboration, and analytics. These may be things principals are not necessarily interested in offering, nor channel partners interested in receiving. However, the data suggests that an upside exists for both sides of the channel partner equation. Is there room for coaching, collaboration, or combining CRM between principals and channel partners? Historically, the answer would be a resounding “No!” Principals had limited visibility into partner pipelines, limited access to prospects/customers, and no time for coaching. After all, if you’re going to do that much hand-holding, wouldn’t it be just as easy to field a direct sales force? This may seem like a reasonable question, but it makes a series of unreasonable assumptions: That the principal could hire enough sales talent, establish sufficient coverage and relationships, and have in place the manager, CRM, and other supporting systems to make all of this happen. Lack of these resources/abilities is typically the main reason firms seek out channel partners. But then a different set of competing priorities ensue—fighting to maintain (top of) mindshare, creating open communications, providing/sharing a common CRM system, etc. Interestingly, perhaps due to the relatively small survey population (108), there was little improvement seen with the addition of a formal CRM system or with better-than-average product training being provided. The percentage of channel partners meeting revenue targets still hovered at less than half (47%). While many might suppose the lowest-rated channel support activity is lead generation support, it actually came in second to last. Last place went to coaching, or lack of it. But the next time you’re being beaten up about lead generation, here’s the data (see table below).

Assessment of Lead Generation Support

Needs Major

Redesign

Needs Improvement

Meets Expectations

Exceeds Expectations

Percentage of partners meeting revenue target

30% 34% 47% 36%

Yes, lead generation is an important and crucial aspect of support for partners; so is training—both sales and product—and coaching on performance, sales process, individual skills and abilities, and more. Having leads is always a good thing; no one will deny that. Making the most of the leads generated is an even better thing.



LEVELS OF RELATIONSHIPS WITH CHANNEL PARTNERS – HOW PARTNERS VIEW YOUR COMPANY


Another concept we have tracked for 10 years is levels of relationship—how sellers are perceived by their customers. The data has been consistent over this period: higher levels of relationship correlate with higher levels of performance. So, too, the same levels of relationship applied to how principals are perceived by their channel partners correlate with higher levels of revenue target attainment, as shown in this chart. The steady, upward march of the revenue attainment figures shows dramatically better revenue attainment as a firm moves up levels of relationship. Vendor level means a firm is one of many principals they represent. Partner level means co-creating strategies to optimize business results.

Key Findings

Supermajority of channel partners perceive relationship at lower levels.

Higher-level partnering relationships correlate with higher performance.

Moving to higher levels of relationship means moving more than product.



Although we say the words “channel partner” in a single breath, it’s noteworthy that less than 1 in 5 relationships actually attain trusted partner status. Could it be that traditional channel partner models have created an environment of mistrust and/or misalignment? If the “relationship” is purely transactional, then it should be made as frictionless as possible to facilitate rapid, repetitive, and routine processing. Whether these are frequent or infrequent, vendor relationships should focus on processing orders quickly and efficiently—period. A Preferred Supplier obviously has some track record of delivering as promised. At the Solutions Consultant level, someone, either the partner or the principal, is also helping install/implement the products and/or services being delivered. A shift begins occurring at this level from not simply providing a deliverable to having an understanding of how the deliverable positively impacts the end-user experience; that is, how it contributes to the channel partner’s customer experience. As firms move above the consultant level to Strategic Contributor and, ultimately, Trusted Partner, there is increasing discussion, planning, and process around where the business is coming from, where it’s going, and the moves the principal and/or channel partner can make to build positive results. For example, one of our clients makes fiber-optic cable and connectors. At the vendor level, these are the products they produce and their channel partners inventory and deliver. At the opposite end of the relationship continuum, they have global partners that represent an enormous resource both in terms of moving volumes of goods and services while also being tapped into the latest trends. Their highest-level relationships appreciate not only the principal’s product quality but also their technical expertise. Their product engineers are often scheduled into meetings with the channel partner and some of the partner’s biggest customers to discuss the latest technologies, future product roadmaps (both principal’s and customer’s), and participate in an open exchange of ideas (under NDA, of course). This isn’t news to anyone, but what may be is the clear increase in revenue attainment that accompanies higher-level relationships and conversations. These higher-level relationships are not without their growing pains and challenges, but they tend to be much less contentious and more open to sharing—information, risk, and benefits. Isn’t that what “partner” really should mean?



SALES ENABLEMENT SERVICES OFFERED TO CHANNEL PARTNERS


For those of us who have worked to sell business through a channel, it is useful to remind

ourselves from time to time that partners are far different than direct salespeople. Your direct

sales teams must focus on becoming successful selling your products and services. Your partners

can represent multiple product lines, which means they have options and will often gravitate

toward selling what is easiest for them at higher margins. Therefore, ensuring you offer the right

types of services to help partners engage customers or prospects becomes paramount to

successfully meeting your indirect revenue goals.

The chart above shows a breakdown of the types of support services survey participants are

offering to enable their channel partners. Topping the list is ensuring that indirect salespeople

have received training on the company’s products/services. Equally important is that they have

access to the sales content needed to educate customers/prospects on the company’s

products/services in order to differentiate the company’s offerings from the competition, to

create a business case to justify the purchase, and more. This is followed closely by presales

support, implementation support, and lead generation services.

Key Findings

The vast majority of companies selling via channels understand they need to provide

support services.

Support during the sales process (coaching/proposal-generating support) is lacking.

Best Practice: Share sales process mapping insights with channel partners.



An item worth noting is that only half of the firms surveyed reported they had a process in place

for partners to register deals to help minimize channel conflict. In drilling deeper into the data,

this appears to be related to how key channels are in terms of overall revenue generation. For

companies where the channel represents >90% of total revenues, deal registration is offered by

nearly two-thirds of the companies, and this decreases to just over one-third of companies when

channels account for 25% of revenues. Lastly, we see that offering help at the mid-stage of a

partner’s sales process, forecast/deal coaching and proposal generation support are the least

common practices.

Next, we looked at the services offered by the

top 20% of the firms surveyed, which were those

companies that had more than 55% of their

channel partners achieving their yearly revenue

targets. The table to the right shows that this

group of companies is more likely to help

channel partners fill their pipeline and coach

them on how to close deals that progress far

enough through the sales process to be added to the forecast.

One best practice that a technology firm shared with us is that they constantly do win/loss/no

decision reviews for not just the opportunities that they pursue directly, but also those pursued

by partners. They use a two-part review process. The first involves interviewing the salesperson

in charge of the account to assess they view of what happened during the sales process.

Specifically, they want to know: which stakeholders they called on, what goals the prospect

reported having, what tactics were leveraged during each phase of the sales process (e.g., needs

analysis, education, solution definition, proposal generation, etc.).

They then paired this up with buyer-side interviews, interviewing key client stakeholders on their

perspectives regarding how they navigated through their evaluation process with the vendors

that made the short list, and how they got to the final go/no-go decision. The inputs of these two

interviews were then compared to surface key factors that lead to winning more deals, losing

more deals, or having a deal stall out with no ultimate decision being made. The best practices

findings from these quarterly reviews were then shared with channel partners so they could

leverage identified strengths and avoid weaknesses.

If you want to learn more about how to conduct this type of analysis, contact CSO Insights. We

will provide a framework for conducting a buy cycle/sell cycle review. Advisory Services clients

looking for a more detailed methodology to accomplish this type of review can access The Buy

Cycle/Sell Cycle Analysis Facilitator’s Guide, which provides templates for how to structure

interviews for both sellers and buyers. Email Kim Cameron for access to this Guide.

Top 20% of Firms (>55% of Partners Meeting Revenue Targets)

Offering These

Services

Marketing and lead generation support 83.3%

Deal coaching/forecast management 61.1%


mailto:[email protected]?subject=The%20Buy%20Cycle/Sell%20Cycle%20Analysis%20Facilitator's%20Guide



CHANNEL PARTNERS’ RATING OF YOUR COMPANY’S PRODUCT TRAINING


Determining what services your company needs to provide your partners is a good start to

optimizing channel performance, but that needs to be followed with effective execution. To gauge

how well companies are doing in this area, we asked study participants to assess how their

channel partners would rate various support services they provide. The chart above summarizes

their responses.

Topping the list is partner sales support. With 62.9% of the firms getting a “meets or exceeds

expectations” rating, we continue to see the increased adoption of virtual selling. In CSO Insights’

2016 Sales Enablement Optimization study, we found that 82.6% of firms surveyed were actively

using web-based meetings to engage customers. This is making it easier for companies to provide

presales support to both direct and indirect sales teams.

Key Findings

Companies get highest marks for sales support and product training.

Lowest ratings are for coaching/pipeline management support and lead generation.

Best Practice: Leverage a partner web portal to help your channel partners reach more

prospects.



A laser manufacturer we benchmarked shared with us that they regularly set up days where

members of their development team schedule time to make virtual sales calls with partner sales

teams. The engineers drop into virtual meetings anywhere in the world, review the prospect’s

plans for using the lasers, and provide input as to the best way for the client to accomplish their

design goals. This blending of high tech with high touch allows channel partners to provide an

improved level of service to potential customers—without having to develop detailed product

expertise inside their own firm.

Product training, sales training, and sales content and collateral also received relatively solid

marks with over 50% of companies reporting they met or exceeded expectations for support in

these key areas. However, two of the services mentioned above, lead generation and coaching

support, needed improvement or needed major redesign. These ratings were 64.1% and 57.8%,

respectively.

To begin to put a number around the impact poor performance has on a company in these two

areas, we segmented the study data between those firms that performed well at providing

partners with lead generation and coaching support against those that did not. The table below

shows that 71.2% of firms that were effective at lead generation and coaching support achieved

76% more of their targeted channel revenue goal, as compared to only 45% of firms that had

suboptimal performance in these channel support services.

Channel Revenue Plan Achievement as Related to Support Services Effectiveness

Overall Channel Revenue Goal

Achievement >90%

Overall Channel Revenue Goal Achievement

76% - 90%

Lead generation/coaching: Meets/ exceeds expectations 47.6% 23.6%

Lead generation/coaching: Needs improvement/major redesign 25% 20%

We developed a case study on how National Instruments (NI), a global leader in the automated

test measurement marketplace, had augmented their direct sales with a network of 800 partners

in 62 countries. In interviewing Armando Valim, Global Partner Program and Network Manager,

he profiled how National Instruments implemented a partner portal. Part of the focus of the portal

was to allow partners to create a web-based presence to generate exposure with prospects in

their territory, and to also provide partners with 24/7 access to content and tools to allow them

to get virtual coaching support from National Instruments.

In tracking channel partner performance before and after the implementation of the partner

portal, this initiative increased lead generation for partners by over 300%, and the compound

annual growth rate of channel revenues increased by 16%.



YOUR COMPANY’S VISIBILITY INTO YOUR CHANNEL PARTNERS’ PIPELINES


Many CSOs voice concerns over the challenges sales management has with getting visibility into

the pipeline of their direct sales force. What about the case where the salespeople who are

engaging customers are one step further removed? Where they report to sales management of

your channel partners, who in turn (hopefully) feed you information on what is going on with the

opportunities in the pipeline?

The chart above shows that only 16.5% of firms surveyed reported that they have access to the

data and metrics needed to clearly assess the viability of their partners’ pipelines. As noted in the

introduction, 41.0% of firms surveyed reported that 35% or less of their channel partners achieved

their revenue goals for the past year. To improve those numbers, these companies are going to

have to provide better coaching and pipeline management support to their partners, and that will

remain a challenge without clear visibility.

Key Findings

Very few companies report that they have a clear understanding of their partners’

opportunity flow.

Partner Relationship Management (PRM) implementation can enhance a company’s

ability to assess what partners are doing.

Best Practice: Help channel partners implement technology-enabled selling.



As part of the study, we asked a

question regarding the use of

Partner Relationship

Management (PRM)

technology. As shown in the

chart to the right, 46.9% of

companies surveyed had no

PRM technology in place to

foster the sharing of

information on opportunities

between their channel partners

and their channel management

team. Another 28.1% had a basic PRM system in place to support deal registration and order

processing, and 25% reported having a comprehensive CRM solution implemented.

To start to assess the impact that technology can have on pipeline management, we segmented

the study data based on reported usage (or non-usage) of PRM systems. The table below shows

that PRM can significantly increase the visibility a company has into the health and well-being of

their channel revenue pipeline.

Assessment of Pipeline Visibility as Related to Use of PRM Technology

No PRM Basic PRM Comprehensive

PRM

Clear visibility 4.9% 15.4% 39.1%

Some visibility 39.0% 26.9% 34.8%

While we have long advocated the use of PRM for companies looking to effectively leverage

channels, another technology-enabled selling trend is worth discussing here: the implementation

of Precision Guided Selling (PGS). A solid example of the impact this can have on channel sales

success is seen in the results generated by Midmark (a manufacturer and supplier of healthcare

products, equipment, and diagnostic software for medical, veterinary, and dental markets) and

one of their key channel partners: Cardinal Health.

Midmark funded the development of an iPad-based PGS application to help Cardinal Health’s

salespeople detail, quote, and close business. Over a three-month period, using this PGS

application, Cardinal Health’s Medical Sales Team increased sales by 240% over the previous year,

while all other distributors’ sales were flat or down. The average deal size increased by 297%

because the salespeople could show and sell more products within the customer’s buying

window.



A key benefit of using the PGS application was that, without salespeople having to fill out call

reports, Midmark captured a wealth of insights into how Cardinal Health salespeople were

engaging their prospects when they were trying to sell Midmark products. By virtue of the

salespeople using the PGS app on the iPads, Midmark was able to track the types of buyers being

called on and observe the flow of the conversation between the seller and the buyer. This allowed

them to gauge buyer reactions to various case studies or ROI business cases shared by the

salesperson.

With access to the actual voice-of-the-customer, Midmark could much more clearly assess the

health of the pipeline than they could relying on PRM alone.

Advisory Services clients who would like to know more about the Midmark case study or the

concept of PGS should contact their CSO Insights analyst for a briefing.

https://www.csoinsights.com/about/



CHANNEL SALES’ CORE FUNDAMENTALS


The good news is a solid majority of survey respondents were in reasonable agreement—14%

strongly agree that their channel managers could articulate why a channel partner organization

was doing business with them and why that channel partner was the best route into a given

market (red bars in chart above).

The bad news is that this same group’s ability to calculate the number of partners needed for

adequate territory/market coverage (purple bars) and/or to assess and rank partner programs

and influence them (green) were the two lowest rated abilities.

So why we’re doing business together is clear enough to all parties, but how effectively we

collectively are addressing the total available market is much less clear. Only slightly better rated

(second to last) is the ability to assess, rank, and influence partners’ sales programs.

Working our way from the bottom up, territory coverage is tricky in every instance unless firms

are in a market where purchases, such as “total IT expenditures,” are carefully reported and

tracked on an ongoing, annual basis. Even in these well-documented instances, changes in buying

Key Findings

Ability to articulate why a partner does business with a firm is highest rated.

Determining coverage models and ranking partner programs rate lowest (of 6).

Best Practice: Avoiding easy, traditional answers may prove useful.



patterns, such as IT services shifting from on-premise (purchased) to cloud (rented) services, can

have a dramatic effect on market sizing.

This is clearly the time and place to be coordinating with your marketing group. Information on

competitive analyses, market segmentation, external data sources (e.g., Bureau of Labor

statistics, analyst reports, etc.), and channel partner customer histories can all contribute to

realistically sizing the available market. Unfortunately, another history may be working against

you. In setting individual sales representative quotas (for direct representatives), using marketing-

supplied statistics for market potential/share was the least referenced (seventh out of seven

approaches).

Visibility, transparency, and sharing are not the terms that rush to mind when discussing channel

relationships or attributes. But these are the attributes of higher-level relationships, and the risks

associated with openness with your channel partners is offset by the potential for saving everyone

a lot of wasted time, energy, and money.

Assessing and ranking channel partner sales programs was the second lowest overall ability.

Again, easy answers will not serve you in this regard. The core question is, “What does success

look like?” This should be followed closely by, “And how do we measure this?” The easy answer

is, “You make your number, and we measure success by the percentage of revenue target

attained.” This simply isn’t helpful.

The reason it isn’t helpful is that you don’t “do” a number, you “do” things (e.g., activities and

initiatives). The final number (revenue booked) is a reflection of the things you did and how well

you did them. Statistics, such as historical buying patterns/volumes and other data, should inform

the territory plans that are devised. Whether the coverage is by account, industry, geography, or

something else, the next step is to identify where the strengths and areas of

uncertainty/vulnerability are.

The guiding principle is to leverage strengths to eliminate/reduce risk. Is product, sales, or

business-acumen training needed to bolster all partners or just a specific one? Are partners, in

turn, committing resources and talent to attend trainings, obtain certifications, and demonstrate

competence? These are the areas of bilateral give-and-take that strengthen and grow channel

partnerships—and provide a basis for measuring success beyond simply making the number.

[Note: We’re not saying “making the number” isn’t important. But to simply stack ranking

partners and their programs by final revenue percentage attainment puts everyone behind the

power curve. There is nothing to proactively manage, and there is no way to measure progress

until the final results are recorded.]

The top-rated ability was the channel sales professionals’ being able to articulate why they are

doing business with/through a particular partner and why this is the best go-to-market approach.

Let’s face it, many, if not most, of the partnerships being discussed have likely been in place for



some time. The best reasons for doing business with/through a partner are: established working

relationship, track record, industry and/or product knowledge, etc.

Great, but have any of these been tested for currency and to determine whether they’re the most

accurate predictors of future success? The concept of firing the sales force and having everyone

re-apply for their jobs is not new—and never popular. But it does cause everyone to assume

nothing and think about who is best suited for each assignment. It needn’t be stated in such

aggressive language, but it could be a useful mindset for establishing in concrete, currently

validated, and data-supported terms why a firm is continuing or beginning to work with a

particular channel partner.



ABILITY TO ARTICULATE BUSINESS DRIVERS TO AFFECT CHANNEL’S MINDSHARE


Larry Parrish, a technology industry channel management executive, once shared with us that the

key to successfully leveraging a sales channel is to constantly remind yourself that your sales in

are the result of your channels’ sales out. Therefore, it is not nearly as important for your partners

to understand your goals, strategies, and objectives as it is for you to understand theirs.

As part of the 2016 Channel Sales Optimization study, we assessed the key behaviors that channel

sales professionals use when working with channel partners. To do this, we used a seven point

Likert scale, ranging from 1 – Strongly Disagree to 7 – Strongly Agree. When we analyzed the

various answers to the questions in the business acumen portion of the survey, three findings

stood out. The highest-rated behavior was the ability of channel sales professionals to be able to

describe the key metrics by which channel partners measure their success. The mean score this

Key Findings

Ability to understand how channel partners measure success is highest-rated business

acumen behavior.

Ability to identify how company’s behavior impacts partners financially is a challenge.

Ability to model ROI to effect changes in partner’s product mix, services, and margins is

also hard.



year came in at 4.85, which was down from a figure of 5.1 reported in the 2014 Channel Sales

Optimization study.

Effectiveness at this aspect of channel management is important because partners often have a

choice in what they sell. If channel professionals are going to get partners to make investment

decisions in the face of competing vendor investment alternatives, they need to be able to

articulate the partner business drivers/imperatives to explain why the recommendations they are

making are in the best interest of the partner. With this in mind, the fact that proficiency at this

behavior is eroding should be of concern to channel management.

Looking at the other end of the spectrum, let’s consider the two lowest-rated behaviors. Coming

in last, with a mean score of 4.2, was the ability of channel sales professionals to be able to model

partner profitability and effect changes to the mix of products, services, and margins, and then

present this in a partner business case for investment. This year’s rating is down significantly from

the mean score of 4.7 in 2014.

Being effective at this skill is especially key when we ask partners to start to sell products or

services they have never sold before. They need to be able to see a clear path to sales and profits

if they are going to make investments in sales training, lead generation, customer support, etc. If

you cannot model that for them, they will be hard-pressed to figure out how to effectively model

it for themselves.

The next-to-lowest-rated behavior was the ability of channel professionals to identify how their

company’s behavior impacts partners financially. The mean rating this year was 4.7. Going back

to the 2014 Channel Sales Optimization study, this was one of the highest-rated behaviors in

terms of effective execution, with a mean rating of 5.3.

The 2016 Sales Enablement

Optimization study pointed

out that companies are

subjected to a never-ending

stream of change. The chart

to the right summarizes the

types of changes these

companies are

encountering. The top

three changes impacting

sales teams are the changes

companies are initiating to

the depth, breadth, and complexity of their product line. Companies need to inform their channel

partners on how these types of changes can impact their business, both positively and negatively.



Looking at the rest of the metrics in this section, it is clear that many channel professionals are

seeing challenges in dealing with business-acumen issues. Additional training and access to new

tools are a clear imperative. While this means making an investment, when we looked at the

channel revenue performance growth for companies that excel at this aspect of channel

management, they noticeably outperform those companies that are average or poor in this area.

So the payback for the training is clearly there.



CHANNELS’ INFLUENCING SKILLS


It’s no secret that buyer behaviors have changed in the past two decades, most dramatically and

quickly with increased reliance upon the internet. The questions have always been, “What do you

know about me/us? What do you know about our business?”

These same questions can fairly be asked by channel partners of their principals. It turns out the

answer is, “Not as much as we should.” Channel sales professionals (CSPs) being able to articulate

the key issues and business priorities that affect their partners at the executive,

middle/departmental, and operational levels ranked fourth of five key influencing skills. How

would your channel partners rate your ability to adequately and accurately articulate their

business issues and priorities?

The president of a manufacturer’s rep company once said, “The manufacturer can’t field a sales

organization for 15% of revenues, but that’s what they expect us to do.” Statements like this

Key Findings

Channel sales professionals know how to ask the right questions and listen.

How well channel sales professionals are applying these skills is up for debate.

Best Practice: Consistent call planning and diagnosing of partner business plans is

critical.



reflect a total lack of understanding of what the channel partner’s business model is, what plans

they have in place to build it out, and how best to support their doing so.

These may be considered old stereotypes, that today’s channel partners are natural extensions of

their principal organizations, and partner representatives are indistinguishable from direct

sellers—equally versed in company philosophy and policies. Oh, were it so.

The data reflects the CSPs’ challenge to articulate their partner’s business issues at every level,

resulting in the partner’s inability or unwillingness to adapt to changing market conditions and be

truly invested in the business relationship (red bars in graphic above).

What’s needed is some questioning and dialogue.

Just in time, the top-rated CSP ability is applying effective questioning and listening to build a

trusted relationship (purple bars). Unfortunately, the worst-rated ability is preparing for meetings

(blue bars) to “diagnose” partners and understand their business!

You may be thinking this is: a) too simple, and b) not true of your organization. Terrific! In this

case, we’d love to be wrong. Here’s a simple test. Start by taking out your call-planning checklist,

the one your channel sales managers or channel sales professionals use to do a basic

needs/business analysis for each partner. If you don’t have one, that’s a problem. If you have one

but haven’t reviewed or revised it in the past 18 months, this is also a problem. If you have a

current checklist that is consistently applied and completed by your channel professionals, then

you’re well on your way to establishing the foundational understanding (i.e., business dialogue)

upon which trusted relationships are built.



CHANNEL CAN CREATE AN OVERALL STRATEGY FOR DEVELOPMENT OF A PARTNERSHIP


Dwight D. Eisenhower once observed that “Plans are nothing; planning is everything.” At first

blush, this may sound like an unlikely idea to come from one of the top military strategists during

World War II. But what Eisenhower realized was that the key to a successful plan was all the work

and thought that went into the planning process. The plan itself was just the output of that

process.

This same observation should be top-of-mind for channel management. To create a plan for

success for each partner, you need an effective planning process. Looking at the 2016 Channel

Optimization study partnership planning metrics, performance in this aspect of channel

management has generally improved, but as you will see, there is still a lot of room for more

improvement.

The highest-rated behavior this year was the ability for channel professionals to facilitate a joint

planning session with a partner. The mean rating this year came in at 5.0, up from the 4.8 figure

reported in the 2014 study.

Key Findings

Ability to facilitate joint planning sessions with partners is highest-rated behavior.

Ability to identify key leading indicators and outcome metrics to track is difficult for

many companies.

Ability to effectively manage and review those plans is much more of a struggle.



A technology advancement that we expect to see positively impact this aspect of channel

management is the evolution of applications to support channel plan and strategies. These

systems do two very useful things. The first is that they ensure a common process is used across

all partners. The second is that they can be used to virtually monitor the implementation of those

plans. As project dates approach, either your company’s or your channel partner’s, the systems

automatically send out reminders to keep the agreed-upon tasks top-of-mind.

Focusing on the bottom two behaviors from the 2016 study, we see two behaviors that dovetail

together. The first of these is the ability of channel sales professionals to identify the best metrics

to measure partnership performance in terms of both leading indicators and outcome metrics.

This had a mean rating of 4.4, up slightly from 4.3 in 2014.

We think this is only half of the equation. The real power of being able to determine which metrics

to measure is only realized if you have the systems in place to collect and analyze those metrics.

Going back to the discussion of PRM technology adoption earlier in this report, we are going to

have to see the comprehensive use of these systems become far more commonplace if channel

management is to have easy access to the information they need to gauge performance.

We also asked the study participants to assess the ability of their channel sales personnel to create

and document a SMART 90-day action plan from a partner yearly plan and effectively

manage/review these activities throughout the quarter. The mean score here was also 4.4, up

from the 4.2 that we reported in the 2014 channel study.

Leadership trainer, John E. Jones, noted once that, "What gets measured gets done, what gets

measured and fed back gets done well, what gets rewarded gets repeated." Metrics and 90-day

plans are meaningless if they aren’t actively measured. To help channel professionals more easily

do that, we again see technology innovations emerging to support this task.

As part of CSO Insights’ 2016 Sales Enablement Optimization study, we asked study participants

to share with us the primary ways salespeople share content and information with prospects. Not

surprisingly, the top answer was they email them materials. While convenient, once the email

goes out, you have limited visibility into what your client did with the material (if anything).

But a small minority (6.6% of the study participants) are using new sales engagement solutions to

share content. These systems send links to content that is stored in a microsite for each prospect.

Using this approach, management can see what content is being shared with which prospects

and, more importantly, what the prospect is doing with the content. Did they ever access it, did

they read it, did they share it with others?

Using approaches like these, channel management can get metrics on the activity of partner

salespeople and see if the plans are being implemented with customers or not. For more

information on this study or to learn more about sales engagement technology, Advisory Services

clients should contact their CSO Insights analyst for a briefing.



LEADING AND MANAGING PARTNERSHIPS


Following training, there are four ways to continue to improve performance: 1) coaching, 2)

practice, 3) reading/watching training materials, and 4) copying peers. While all can contribute,

individual coaching still outpaces all others. This year’s survey respondents gave their channel

sales professionals highest scores for their ability to coach partners through critical stages in the

sales process and the partner planning process.

However, these same people gave the lowest marks (40%) to CSPs’ understanding and being

able to demonstrate performance coaching (green bars). And just one step up (44%) from this

bottom capability is coaching based on an individual partner’s skills and motivation.

At this point, your CSPs may be saying, “Hey, I coach my partners!” Indeed, they may be doing

so in certain aspects of the process, or in certain situations. But is it as impactful and meaningful

as it could be? If not, what can be done to improve the situation—that is, can you coach the

coach?

In the most basic terms, coaching is feedback. A coach provides individuals with the one thing

that they can’t do for themselves—to see themselves. We’re always gauging our performance

Key Findings

Coaching is the number one key to reinforcement and improved performance.

Specific coaching skills needed by channel sales professionals vary.

Coaching needs to meet five tests to be effective and meaningful.



based on reflections: our performance results, people’s reactions to what we’re doing, how

prepared and “in flow” we feel while performing, etc. A coach holds up a mirror so that we can

see our performance, and the quality of the “mirror” is the quality of the coaching.

To be meaningful, coaching needs to meet five tests. It must be: 1) timely, 2) objective, 3)

accurate, 4) relevant, and 5) individualized.

The data is interesting in that CSPs get high marks for coaching on the sales process and low marks for performance coaching and coaching on individual skills and motivation. Does it matter as long as we’re driving home the sales process steps? The table below shows the results for three selected indicators for companies that agreed/strongly agreed versus those that disagreed/strongly disagreed that their CSOs did/did not demonstrate these coaching abilities.

CSPs Understand/Demonstrate Performance Coaching and Develop Individual Coaching Plans

Agreed/

Strongly Agreed

Disagreed/

Strongly Disagreed

How long does it take to get a new partner fully productive? 9 Months 10 Months

What percentage of partners meet revenue target? 40% 19%

How did average revenues per channel partner change in the past year?

+7.3% -3.3%

Tailoring coaching to individual partner skills and abilities along with overall performance coaching—not just major steps in the sales process (i.e., what it’s going to take to get the deal)—did significantly better. New partner ramp-up times were 10% shorter, the percentage of partners meeting their revenue targets doubled, and year-over-year revenue growth per partner tripled. You’ll often hear sales leaders say, “We need to get back to basics.” Continuing to have CSPs drill partners on the critical stages in the sales process, while building competence in performance coaching tailored to individual skills and abilities, pays real dividends.



ABOUT CSO INSIGHTS

As the research arm of Miller Heiman Group, CSO Insights is dedicated to improving your organization’s performance and productivity. Our respected analysts provide sales leaders around the world with research, data, expertise, and best practices necessary for developing sustainable strategies that improve sales performance. Although we are part of Miller Heiman Group, our research is independent and uninfluenced by any organizations and companies we measure. Our benchmarking capabilities are the industry standard when it comes to delivering behavioral and operational insights for improved performance. They can also provide a holistic assessment of your organization’s selling and sales management effectiveness.

https://www.millerheimangroup.com/

https://www.csoinsights.com/

Documents

CSO Insights 2016 Channel Sales Optimization Study · CSO Insights 2016 Channel Sales Optimization Study ... CSO Insights 2016 Channel Sales Optimization Study ... After all, if you’re